Draft SAWG/RAWG Agenda Survey A Presentation to the MISO Supply Adequacy Working Group by the OMS Resource Adequacy Working Group August 16, 2004

On August 6, 2004, FERC conditionally accepted the Midwest ISO’s Energy Market Tariff in Docket No. ER The OMS asks for your continued assistance through the MISO SAWG/OMS RAWG stakeholder process to develop resource adequacy requirements and capacity market features of a permanent resource adequacy requirement (RAR) to replace the MISO EMT Module E interim measures as requested by FERC

We need your views and preferences collected through responses to sets of survey questions. 1.to report progress to the MISO Market Subcommittee and the OMS Board 2.to structure time and effort spent on the Joint SAWG/RAWG workplan more effectively.

The SAWG/RAWG Agenda Survey -- SAMPLE-- Please respond to the following: The respondent to this survey is: Check (√ ) the applicable category I. POPULATION FOR THE SURVEY ( ) Vertically-integrated Transmission Owner ( ) Utility-owned Generator ( ) Merchant Generator ( ) Representative of municipal utility(s) ( ) Representative of Rural Coop(s) ( ) Wholesale Marketer ( ) Competitive Retail Marketer ( ) State Regulator ( ) State Consumer Advocate ( ) Other ____[identify]_____________________ `.

The SAWG/RAWG Agenda Survey -- SAMPLE-- II. RESERVE MARGIN REQUIREMENTS A. ZONAL ISSUE: Reserve Margin Requirements should be established by - Check (√ ) the applicable category. ( ) Regional Reliability Organization(s) for each RRO area of MISO ( ) The Midwest ISO, for its entire footprint ( ) Identifiable interconnected “deliverability zones” within the MISO footprint ( ) All of the above

The SAWG/RAWG Agenda Survey --SAMPLE-- A.1 ZONAL TASK: Taking into account the differences in the reserve margin requirements in the current Regional Reliability Organizations (RROs) and some of the States in the MISO footprint, the MISO should use the MAPP construct as a model and continue to allow the RROs to set long-term planning reserve targets for reliability based on Loss-of-Load-Expectation (LOLE) for one day in 10 years. Reserve margin requirements set at superior levels by State law will be left in place unless relieved by a State waiver. Check (√ ) the applicable category ( ) Strongly agree ( ) Somewhat Agree ( ) Somewhat Disagree ( ) Strongly Disagree ( ) No Opinion

The SAWG/RAWG Agenda Survey -- SAMPLE-- A.2.1. NEW RESOURCE TASK: Installed capacity resources should continue to be certified under the Uniform Rating of Generating Equipment (URGE) as required by the North America Electric reliability Council (NERC) through the RROs. Check (√ ) the applicable category ( ) Strongly agree ( ) Somewhat Agree ( ) Somewhat Disagree ( ) Strongly Disagree ( ) No Opinion.

SAWG/RAWG AGENDA SURVEY A.3 DEFICIENCY ISSUE: Reserve Margin Requirements should include penalties for capacity deficiencies by -- Check (√ ) the applicable category. ( ) Using the MAPP method for an “after-the-fact” analysis of capacity shortfalls by load-serving entities ( ) Imposing a financial penalty for daily deficiencies set at the incremental cost of a new CT with a true-up at the end of the month ( ) Using an administratively set demand curve requirement based on load history to negate the necessity of imposing any deficiency penalties. ( ) Other [use the space provided below to suggest alternatives for preventing load- serving entities that have not procured adequate resources from unfairly leaning on the resources of other load-serving entities].. A.3 DEFICIENCY ISSUE : Your suggested Alternative:___________ _________ __________________________________________________________________________ (Task and Timing to be determined for a category as it is selected.)

III. CAPACITY MARKET DESIGN REQUIREMENTS

FERC states: “Given the significant overlap of the Midwest ISO and PJM, we strongly encourage parties in both areas to seek a common installed Capacity design. PJM currently has two distinct “control area zones:” PJM (original) and PJM West: AEP, Dayton Power and Light, and Commonwealth Edison--all having seams with MISO. The AEP system--as a result of the Stipulation with the Kentucky PSC, will continue to be dispatched by AEP. In turn, the PJM Western “control area zone” will be dispatched separately but in a coordinated fashion with PJM (original).

PJM deliverability assumptions that aggregate resources are deliverable to aggregate load is validated through System Impact Studies that confirm this assumption on a control area zonal basis, not for the entire PJM “footprint.” MISO Stakeholders and the OMS RAWG may also find it helpful to consider separate “control area zones” for the operation of a MISO capacity market…

…and continue to assess features being developed for of the PJM “straw” proposal as the IPPs recommended to the MISO Stakeholders and the OMS RAWG August 3, The features of a MISO-adapted “PJM Straw Proposal” should be designed to benefit all zones in the MISO footprint, regardless of location.